A short sale is a situation when a homeowner is trying to sell their home for less money than they owe on thier mortgage. Economic conditions being what they are, short sales are becomeing more prevelant, even in trophy real estate districts like the Oakland Hills: Montclair, Upper Rockridge, Broadway Terrace, Berkeley: North Berkeley, Elmwood, Claremont and the city of Piedmont CA. In order for a property owner to do a short sale, it requires the lenders consent because the bank is essentially agreeing to release the borrower from their obligation to pay back the full loan amount. Why would a lender do this? Because the only other option is to forclose on the property. Right now, many banks have more forclosed homes (REO’s) then they know what to do with. On average, When a bank forcloses, then resells the property they only get .75 cents on their mortgage dollar. If agreeing to a short sale results in a 15% loss instead of a 25% loss then the bank comes out ahead.
Buyers interested in purchasing a short sale should be prepared for unforseen delays and difficulties. If you make an offer and the Seller accepts it, that’s only the beginning. The Seller or their listing agent then needs to get the lender to agree the sale. Each lender has it’s own policies and methods of dealing with short sales. Some are better than others. If the lender doesn’t agree to the short sale (for whatever their reason) the deal is OFF.
To make a long story short, unless you feel like you may never find this same house again, you may want to think twice about getting into contract on a short sale property. Who knows, you may even be able to get a better deal if the property becomes a REO bank owned listing.
I have been providing Oakland Hills real estate services since 1998. I am an Oakland Hills resident and would be happy to help you find your perfect home. Please feel free to contact me at anytime. Have a great day. Brian Santilena Pacific Union Real Estate Oakland-Montclair.